City finance director Pat Weber gave Billings good news Monday when he recommended a 2014 total property tax levy that is 10.58 mills less than last year.
The Montana Department of Revenue’s recent settlement of tax protests with Charter Communications and Verizon Wireless released back taxes that had been tied up in the protests. As a result, the city needs to levy $1.2 million less in taxes for public safety this year because it has the previously protested funds.
The Charter and Verizon settlements will have the opposite effect in future years because the agreements reduced the taxable value of these corporations’ property.
Gazette readers can see that Billings has grown in the past few years and that it’s growing now. But the city’s taxable value will actually decrease 0.5 percent this year because the tax settlements more than offset the city’s growth, according to Weber.
State property assessments determine how much money the city can raise for each mill it levies. The Billings City Charter caps the number of mills that can be levied. Only a vote of city residents can raise that cap.
Billings voters have approved levies to build the new ballpark, the new public library, a library operating levy and two public safety levies in addition to the general fund levy, which is capped at 74 mills.
Since 2009, the amount of general fund taxes collected by the city has been nearly flat – despite actual growth in the city. In 2009, the city general fund collected $10.7 million in real estate taxes; in 2014 it is estimated to collect $10.8 million. (The city is transferring all general fund tax collections and additional general fund revenue to the public safety fund.)
Tax collections leveled off in 2009 when new state appraisals took effect and the Legislature tweaked the tax formula to prevent large tax increases.
In preparing the proposal for the public safety levy that will be on the Nov. 4 ballot, Weber projected that the value of a city mill will increase by 1 percent per year over the next 10 years. Such slow, steady growth has been the norm for the community’s population growth. Yet even if the city grows at 1 percent or better, the amount of money the city collects in taxes could drop, depending on state tax law changes and tax protests.
The Nov. 4 levy proposal seeks authority for the city to levy an additional number of mills for public safety: 12 mills in 2015, increasing gradually to 125 mills in 2025, and then continuing permanently at 125 mills per year. The proposal includes an estimate of how much money the levy would collect each year. But the actual amount would depend on the value of a mill – and that depends on growth, tax protests and state tax law changes.
Yes, this is complicated. Voters are being asked to consider a police and fire levy that is based on complex projections. Now is the time for citizens to join a community conversation to better understand the decision they will make in November.